♪ shimmy, shimmy chocolate. ♪ shimmy, shimmy chocolate. ♪ we, we chocolate cross over. ♪ yeah, we chocolate cross over. ♪ [ male announcer ] introducing fiber one 80 calorie chocolate cereal. ♪ chocolate. [watch ticking] >> it's just take-your-breath away type explosions, shake your body to the core explosions. >> mike williams was the chief electronics technician on board the deepwater horizon, one of the last to escape the inferno after the blowout in the gulf. he believes a series of mishaps may have led to the catastrophe, and his story has been critical to the investigation, a story he first told on 60 minutes.

>> all the things that they told us could never happen happened. >> what he's saying is very important to this investigation, you believe. >> it is. >> who's responsible? >> bp. [watch ticking] >> my parents are my best friends. they're all i had. my life ended that day. bp ruined my life and ended my life that day. i had to start all over. >> eva rowe's parents were among the 15 who died that day in texas city. it was the worst workplace accident in this country in 16 years. >> these things do not have to happen. they are preventable. they're predictable, and people do not have to die because they're earning a living. >> welcome to 60 minutes on cnbc. i'm leslie stahl. oil is the engine that drives our economy. and as oil becomes scarcer, the push to discover and develop new

sources becomes increasingly dangerous. this edition examines two recent disasters in the oil industry with a great deal in common: the deepwater horizon rig in the gulf of mexico and the refinery at texas city, which suffered explosions five years apart. they were both operated by bp. and in both cases, 60 minutes looked at whether bp's cost saving measures may have had deadly consequences. first we'll look at the biggest off shore oil spill in history, the blowout of the deepwater horizon drilling rig in 2010. critical revelations in the disaster have come from one of the last crewmen to escape the rig, mike williams, who first told his story to scott pelley in may, 2010. williams said the blowout was the result of a series of mishaps that started weeks before. the night of the disaster, he was in his workshop when the engines that power the rig's

generators began to run wild. it was the first sign that explosive gas was enveloping the deepwater horizon. >> i heard the engines revving. the lights are glowing. i'm hearing the alarms. i mean, they're at a constant state now. it's just, "beep, beep, beep." it doesn't stop. but even that's starting to get drowned out by the sound of the engine increasing in speed. and my lights get so incredibly bright that they physically explode. i'm pushing my way back from the desk when my computer monitor exploded. >> this is the deepwater horizon in the hours before its destruction the night of april 20th. ironically, the end was coming only months after the rig's greatest achievement. mike williams was the chief electronics technician in charge of the rig's computers and electrical systems. and seven months before, he'd helped the crew drill the deepest oil well in history: 35,000 feet.

>> it was special. there's no way around it. everyone was talking about it. the congratulations that were flowing around, it just made you feel proud to work there. >> williams worked for the owner, transocean, the largest offshore drilling company. like its sister rigs, the deepwater horizon cost $350 million, rose 378 feet from bottom to top, both advanced and safe. none of her 126 crew had been seriously injured in seven years. [machinery whirring] >> go, go, go! >> the safety record was remarkable, because offshore drilling today pushes technology with challenges matched only by the space program. deepwater horizon was in 5,000 feet of water and would drill another 13,000 feet, a total of 3 1/2 miles. the oil and gas down there are under enormous pressure. and the key to keeping that

pressure under control is this fluid that drillers call mud. mud is a man-made drilling fluid that's pumped down the well and back up the sides in continuous circulation. the sheer weight of this fluid keeps the oil and gas down and the well under control. >> come on, come on. >> the tension in every drilling operation is between doing things safely and doing them fast. time is money, and this job was costing bp $1 million a day. but williams says there was trouble from the start. getting to the oil was taking too long. how long did you expect it to take? >> we were told 21 days. >> how long did it actually take? >> we were at six weeks. >> with the schedule slipping, williams says a bp manager ordered a faster pace. >> and he requested to the driller, "hey, let's bump it up. let's bump it up." and what he was talking about there is, he's bumping up the rate of penetration, how fast the drill bit is going down. >> williams says going faster

caused the bottom of the well to split open, swallowing tools and the drilling fluid called mud. >> we actually got stuck. and we got stuck so bad that we had to send tools down into the drill pipe and sever the pipe. >> that well was abandoned. deepwater horizon had to drill a new route to the oil. it cost bp more than two weeks and millions of dollars. >> we were informed of this during one of the safety meetings that somewhere in the neighborhood of $25 million was lost in bottom hole assembly and mud. and you always kind of knew that in the back of your mind when they start throwing these big numbers around that there was gonna be a push coming. you know, a push to pick up production, pick up the pace. >> there was pressure on the crew after this happened? >> there's always pressure, but yes, the pressure was increased. >> but the trouble was just beginning. when drilling resumed, williams says, four weeks before the explosion, the rig's most vital piece of safety equipment was damaged.

down near the seabed is the blowout preventer, or b.o.p. it's used to seal the well shut in order to test the pressure and integrity of the well, and in case of a blowout it's the crew's only hope. a key component is a rubber gasket at the top called an annular, which can close tightly around the drill pipe. williams says that during a test they closed the gasket. but while it was shut tight, a crewman on deck accidentally nudged a joystick, applying hundreds of thousands of pounds of force and moving 15 feet of drill pipe through the closed blowout preventer. later, a man monitoring drilling fluid rising to the top made a troubling find. >> he discovered chunks of rubber in the drilling fluid. he thought it was important enough to gather this double handful of chunks of rubber and bring them into the driller shack. i recall asking the supervisor

if this was out of the ordinary. he said, "oh, it's no big deal." and i thought, "how can it be not a big deal? there's chunks of our seal is now missing." >> and williams says he knew about another problem with the blowout preventer. the b.o.p. is operated from the surface by wires connected to two control pods. one is a backup. williams says that one of the pods lost some of its function weeks before. transocean tells us the b.o.p. was tested by remote control after these incidents and passed. but nearly a mile below, there was no way to know how much damage there was or why the pods seemed unreliable. in the hours before the disaster, deepwater horizon's work was nearly done. all that was left was to seal the well closed. the oil would be pumped out by another rig later. williams says that during a safety meeting, the manager for the rig owner, transocean, was explaining how they were going

to close the well when the manager from bp interrupted. >> i had the bp company man sitting directly beside me. and he literally perked up and said, "well, my process is different. and i think we're gonna do it this way." and they kind of lined out the way that he thought it should go that day. so there was sort of a chest bumping kind of deal. the communication seemed to really break down as to who was ultimately in charge. >> when we return, the mishaps on deepwater horizon have tragic consequences. >> i heard this awful hissing noise, this "whoosht," and at the height of the hiss a huge explosion. [watch ticking] ♪

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[watch ticking] >> the day of the blowout bp

flew several managers to the deepwater horizon for a ceremony to congratulate the crew for seven years without an injury. while they were there, a surge of explosive gas came flying up the well from three miles below. the rig's diesel engine switched power to electric generators, sucked in the gas, and began to run wild. >> i'm hearing hissing. the engines are over-revving, and then all of a sudden, all of the lights in my shop just started getting brighter and brighter and brighter. and i knew then we were-- something bad was getting ready to happen. >> it was almost 10:00 at night, and directly under the deepwater horizon were four men in a fishing boat: albert andry, dustin king, ryan chaisson, and westley bourg. >> when i heard the gas comin' out, i knew exactly what it was almost immediately. >> when the gas cloud was descending on you, what was that like? >> it was scary. and when i looked at it, it

burned my eyes. and i knew we had to get out of there. >> you could tell what it was? >> i knew it was methane. >> on the rig, mike williams was reaching for a door to investigate the engine noise. >> these are 3-inch thick steel, fire-rated doors with six stainless steel hinges supporting 'em on the frame. as i reach for the handle, i heard this awful hissing noise, this "whoosht," and at the height of the hiss, a huge explosion. the explosion literally rips the door from the hinges, hits, impacts me and takes me to the other side of the shop. and i'm up against the wall, when i finally come around, with the door on top of me. and i remember thinking to myself, "you know, this, this is it. i'm gonna die right here." >> the men on the fishing boat had a camera, >> look at the water on fire. >> i began to crawl across

the floor. as i got to the next door, it exploded and took me, the door, and slid me about 35 feet backwards again and planted me up against another wall. at that point, i made a decision. "i'm going to get outside. i may die out there, but i'm gonna get outside." so i crawl across the grid work of the floor and make my way to that opening, where i see the light. i made it out the door, and i thought to myself, "i've accomplished what i set out to accomplish. i made it outside. at least now i can breathe. i may die out here, but i can breathe." >> williams couldn't see. something was pouring into his eyes, and that's when he noticed a gash on his forehead. >> i didn't know if it was blood. i didn't know if it was brains. i didn't know if it was flesh. i didn't know what it was. i just knew there was--i was-- i was in trouble. at that point, i grabbed a lifejacket. i was on the aft lifeboat deck.

there were two functioning lifeboats at my disposal right there. but i knew i couldn't board them. i had responsibilities. >> his responsibility was to report to the bridge, the rig's command center. >> i'm hearing alarms. i'm hearing radio chatter, "mayday, mayday, mayday. we've lost propulsion! we've lost power! we have a fire! man overboard on the starboard forward deck." >> we lost personnel in the water. any person that can help, it will be really appreciated. >> williams says that on the bridge he watched them try to activate emergency systems. >> the b.o.p. that was supposed to protect us and keep us from the blowout obviously had failed. and now the emergency disconnect to get us away from this fuel source has failed. we have no communications to the b.o.p. >> the situation that's around, there's a lot of people jumping in the water. [indistinct radio chatter] >> and i see one of the lifeboats in the water, and it's motoring away from the vessel. i looked at the captain and asked him.

i said, "what's going on?" he said, "i've given the order to abandon ship." >> every sunday they had practiced lifeboat drills and the procedure for making sure that everyone was accounted for. but in the panic, all that went to hell. the lifeboats were leaving. they're leaving without you? >> they have left, without the captain and without knowing that they had everyone that had survived all this onboard. i've been left now by two lifeboats. and i look at the captain, and i said, "what do we do now?" by now the fire is not only on the derrick. it's starting to spread to the deck. at that point, there were several more explosions, large, intense explosions. >> what do they feel like, sound like? >> it's just take-your-breath-away type explosions, shake your body to the core explosions. take your vision away from the percussion of the explosions. >> about eight survivors were left on the rig. >> i said, "we're gonna burn up, or we're gonna jump.

>> how far is it to the sea? >> maybe 90 feet, 100 feet. it's a long ways. >> in the middle of the night, with blood in his eyes, fire at his back, and the sea ten stories below, williams made his choice. >> i remember closing my eyes and sayin' a prayer, and asking god to tell my wife and my little girl that daddy did everything he could and if i survive this, it's for a reason. i made those three steps, and i pushed off the end of the rig. and i fell for what seemed like forever. a lot of things go through your mind. [watch ticking] >> mike williams' story continues. >> and i thought, "well, i

must have burned up, 'cause i don't feel anything. i don't hear anything. i don't smell anything. i must be dead." >> when 60 minutes on cnbc returns. [watch ticking] right that's a fr problem... ok. not in my house! ha ha ha! ha ha ha! no no no! not today! ha ha ha! ha ha ha! jimmy how happy are folks who save hundreds of dollars switching to geico? happier than dikembe mutumbo blocking a shot. get happy. get geico.

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into the sea. >> i went down way, way below the surface, obviously. and when i popped back up, i felt like, "okay, i've made it." but i feel this god-awful burning all over me. and i'm thinking, "am i on fire?" you know, i just don't know. so i start doin' the only thing i know to do, swim. i got to get away from this thing. i could tell i was floatin' in oil and grease and diesel fuel. i mean, it's just the smell and i remember lookin' under the rig and seein' the water on fire. and i thought, "what have you done? you were dry, and you weren't covered in oil up there. now you've jumped and you've made this, and you've landed in oil. the fire's gonna come across the water, and you're gonna

burn up." and i thought, "you just got to swim harder." so i swam, and i kicked, and i swam, and i kicked, and i swam as hard as i could until i remember not feelin' any more pain, and i didn't hear anything. and i thought, "well, i must have burned up, 'cause i don't feel anything. i don't hear anything. i don't smell anything. i must be dead." and i remember a real faint voice of, "over here, over here." and i thought, "what in the world is that?" and the next thing i know, he grabbed my lifejacket and flipped me over into this small open bow boat. i didn't know who he was. i didn't know where he'd come from. i didn't care. i was now out of the water. >> williams' survival may be critical to the investigation. we took williams' story to dr. bob bea, a professor of engineering at the university of california, berkeley, and a former chief engineer of shell oil.

the white house has asked bea to help analyze the deepwater horizon accident. bea investigated the columbia space shuttle disaster for nasa and the hurricane katrina disaster for the national science foundation. bea's voice never completely recovered from the weeks he spent in the flood in new orleans. but as the white house has found, he's among the nation's best. he's investigated more than 20 offshore rig disasters. >> mr. williams comes forward with these very detailed elements from his viewpoints on a rig. that's a brave and intelligent man. >> what he's saying is very important to this investigation, you believe? >> it is. >> what strikes professor bea is mike williams' description of the blowout preventer. williams says that in a drilling accident four weeks before the explosion, the critical rubber gasket, called an annular, was damaged, and pieces of it started coming out of the well. according to williams, when

parts of the annular start coming up onto the deck, someone from transocean says, "look, don't worry about it." what does that tell you? >> "houston, i think we have a problem." >> here's why that's so important. the annular is used to seal the well for pressure tests. and those tests determine whether dangerous gas is seeping in. so if the annular is damaged, if i understand you correctly, you can't do the pressure tests in a reliable way? >> that's correct. you may get pressure test recordings, but because you're leaking pressure, they are not reliable. >> mike williams also told us that a backup control system to the blowout preventer, called a pod, had lost some of its functions. what is the standard operating procedure if you lose one of the control pods on the b.o.p.?

>> reestablish it, fix it. it's like losing one of your legs. >> the morning of the disaster, according to williams, there was an argument in front of all the men on the ship between the transocean manager and the bp manager. do you know what that argument was about? >> yes, who's boss. >> in finishing the well, the plan was to have a subcontractor, halliburton, place three concrete plugs, like corks, in the column. the transocean manager wanted to do this with the column full of heavy drilling fluid--what drillers call mud--to keep the pressure down below contained. but the bp manager wanted to begin to remove the mud before the last plug was set. that would reduce the pressure controlling the well before the plugs were finished. why would bp want do that? >> it expedites the subsequent steps. >> it's a matter of going faster. >> faster, sure.

>> who won the argument? >> bp. >> if the mud had been left in the column, would there have been a blowout? >> it doesn't look like it. >> to do it bp's way, they had to be absolutely certain that the first two plugs were keeping the pressure down. that life-or-death test was done using the blowout preventer which had the damaged gasket. investigators have also found that the b.o.p. had a hydraulic leak and a weak battery. [watch ticking] >> bp blames a contractor for the disaster. >> the responsibility for safety on the drilling rig is with transocean. >> when 60 minutes on cnbc continues. [watch ticking] [ male announcer ] you are a business pro.

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>> in 2010, scott pelley reported on mechanical errors that contributed to the deepwater horizon disaster. he also looked at human errors that may have played a role, including a decision not to fix the blowout preventer, or b.o.p., which failed catastrophically on april 20th. >> weeks before the disaster, they know that they are drilling into a very dangerous formation. the formation has told them that. >> that's correct. >> and has cost them millions of dollars. >> that's correct. >> and they know the b.o.p. is broken. >> correct. >> broken in a number of ways. >> correct. >> what is the appropriate thing to do at that point? >> i express it to my students this way. it's, "stop. think. don't do something stupid."

>> they didn't stop. as the drilling fluid was removed, relieving the downward pressure, the plugs failed. the blowout preventer didn't work. and 11 men were incinerated. 115 crewmembers survived. two days later, the deepwater horizon sank to the bottom. this was just the latest disaster for a company that is the largest oil producer in the united states. bp, once known as british petroleum, was found willfully negligent in a 2005 texas refinery explosion that killed 15 of its workers. bp was hit with $108 million in fines, the highest workplace safety fines in u.s. history. now there is new concern about another bp facility in the gulf. a former bp insider tells us this platform called atlantis is a greater threat than the deepwater horizon. ken abbott has worked for shell

and g.e., and in 2008 he was hired by bp to manage thousands of engineering drawings for the atlantis platform. >> they serve as blueprints and also as a operator manual, if you will, on how to make this thing work, and more importantly, how to shut it down in an emergency. >> but abbott says that he found that 89% of those critical drawings had not been inspected and approved by bp engineers. even worse, he says 95% of the underwater welding plans had never been approved either. are these welding procedures supposed to be approved in the paperwork before the welds are done? >> absolutely. yeah. they're critical. >> critical? >> critical. >> abbott's charges are backed up by bp internal emails. in 2008, bp manager barry duff wrote that the lack of approved drawings could result in...

duff called the practice fundamentally wrong. >> i've never seen this kind of attitude where, you know, safety doesn't seem to matter, and when you complain of a problem like barry did and like i did and try to fix it, you're just criticized and pushed aside. >> ken abbott was laid off. he took his concerns to a consumer advocacy group called food & water watch. they're asking congress to investigate. >> the atlantis is still pumping away out there, 200,000 barrels a day, and it will be four times that in a year or two when they put in all 16 wells. i mean, if something happens there, it will make the deepwater horizon look like a, you know, bubble in the water by comparison. >> in an email, bp told us the atlantis crew had all the documents it needs to run the platform safely. we also wanted bp's perspective on the deepwater horizon disaster.

the company scheduled an interview with its ceo, tony hayward. and then they cancelled, saying no one at bp could sit down with 60 minutes for this report. in other interviews, hayward has said this about transocean, the owner of the deepwater horizon... >> the responsibility for safety on the drilling rig is with transocean. it is their rig, their equipment, their people, their systems, their safety processes. >> when bp's chief executive officer tony hayward says that this is transocean's accident, what do you say? >> i get sick. this kind of division in the industry is a killer. the industry is comprised of many organizations. and they all share the responsibility for successful operations. and to start placing, we'll call it these barriers, and pointing fingers at each other is totally destructive.

>> but who is responsible? >> bp. >> all told, about 5 million barrels of oil spewed into the water, the largest off-shore spill in history. bp established a $20 billion fund to pay claims related to the spill. there are plenty of accusations to go around that bp pressed for speed, halliburton's cement plugs failed, and transocean damaged the blowout preventer. bit through all of these red flags, they pressed ahead. it was, after all, the deepwater horizon, the world record holder, celebrated as among the safest in the fleet. >> men lost their lives. i don't know how else to say it. all the things that they told us could never happen happened. >> in the summer of 2010,

mike williams testified before government investigators about the events leading up to the blowout. in addition to the errors he related to 60 minutes, he said that an automatic gas alarm was purposely inhibited to prevent it to waking crew members with false alarms. a presidential panel issued a report in january, 2011, finding that bp and its contractors, transocean and halliburton, bore primary responsibility for the disaster. but the panel also cited systemic problems with drilling in the gulf and with government oversight of the industry. other investigations, including a criminal probe by the justice department, are ongoing. bob bea's investigative panel blamed bp's corporate culture, which they said was embedded in risk taking and cost cutting. you know, that's almost what investigators found after the 2005 explosion at bp's refinery in texas city.

we'll look at that disaster when we return. [watch ticking] [watch ticking]

>> in 2005, another disaster on another oil facility owned by bp, a refinery in texas city, killed 15 oil workers and injured at least 170 others.

in 2006, 60 minutes spent three months investigating that explosion. our late colleague ed bradley found evidence that bp ignored warning after warning that something terrible could happen there. >> the bp refinery in texas city extends over nearly two square miles on the outskirts of galveston. it's the third largest refinery in the u.s. on march 23, 2005, bp employees and contract workers began an especially dangerous procedure: restarting a unit that had been down for repairs. they began to fill a tower with gasoline. the tower overflowed, and the excess gas flowed into this backup unit, which then also overflowed and sent a geyser of gasoline into the air. pat nickerson, a 28-year veteran of the texas city refinery, was on the site that day, driving his truck to an

office trailer. >> i looked down the road. and it looked like fumes, like on a real hot day, you see these heat waves coming up. and then i saw an ignition and a blast. then my windshield shattered. the roof of the vehicle i was driving caved in on me. >> the plume of gas had formed a massive vapor cloud on the ground, and an idling truck likely had ignited the fumes. the blast pulverized several office trailers full of workers parked nearby. pat nickerson began digging through the wreckage looking for survivors. >> out of the corner of my eye, there was somebody on the ground. a guy named ryan rodriguez, and he was just kind of staring at me. he couldn't move because his face was so, you know, deformed and everything from the blast. and some, you know, bones and stuff that were, you know, protruding from his chin. >> what happened to him eventually? >> he died in the ambulance. >> 21-year-old eva rowe was driving to texas city to visit her parents, who worked in one of those trailers. >> i was at a gas station about

45 minutes away. some man inside said that the bp refinery had exploded. i called my mom. and my mom didn't answer, and that's not like my mom. she always answered. >> it was hours before eva rowe learned what had happened. >> a worker who actually worked at the plant collapsed to the floor crying, telling me that he was so sorry that he couldn't find my parents, but he'd been looking for them since the explosion happened. >> and so then i knew. >> eva rowe's parents were among the 15 who died that day in texas city. >> my parents were my best friends. they're all i had. my life ended that day. bp ruined my life ended my life that day. i had to start all over. >> in the aftermath of the explosion, bp blamed the disaster mostly on operator error and fired six employees. we went to texas city to investigate further. bp officials gave us a tour of the

refinery, but they declined our request for an interview. they referred us to their own report on the explosion, which concluded... but when we spoke to the chief government official who has been investigating the explosion, she told us that's not true. >> the problems that existed at bp texas city were neither momentary nor superficial. they ran deep through that operation of a risk denial and a risk blindness that was not being addressed anywhere in the organization. carolyn merritt, appointed by president bush to chair of the u.s. chemical safety board, has led an 18-month investigation into what happened at texas city. >> these things do not have to happen. they are preventable. they are predictable, and people do not have to die because they're earning a living. >> you think this accident

could have been easily prevented? >> absolutely. >> merritt's investigators found problems at texas city just about everywhere they looked: antiquated equipment, corroded pipes about to burst, and safety alarms that didn't work. >> there were three key pieces of instrumentation that were actually supposed to be repaired that were not repaired. and the management knew this. >> and nothing was done about it? >> they authorized the startup knowing that these three pieces of equipment were not properly working. >> but it wasn't just equipment that failed at texas city. bp broke its own rules by placing trailers full of workers in this open area right next to the unit being filled being filled with gasoline. bp also failed to tell the workers in those trailers about the dangerous operation about to take place close by. >> there was not a thing said about that unit starting up. >> so if i understand you correctly, that morning there was a safety meeting. >> mm-hmm.

>> the plant was about to start up the unit, which is an especially dangerous procedure, but none of the workers were told about this at the safety meeting? >> nothing was said. >> how many of you were at the meeting? >> 300, 400 people. >> placing a trailer during a startup operation that's going to be full of people without any warning is the telltale sign that you've lost that understanding and realization of the very risk of what you do. bp is the world's third largest oil company with headquarters in london and assets that stretch from alaska to the caspian sea. the company got as big as it is today by acquiring old companies at cheap prices, and then relentlessly cutting costs, that according to matt simmons, chairman of a major energy investment banking firm. >> their reputation as what a fabulous company they were got created because they made more

money than anyone else did on old assets. >> and did they do that by cutting costs? >> well, they had to. but i don't think it was obvious to anybody until now. you look back with the benefit of hindsight. they obviously cut way too many costs. >> couldn't you argue that bp had to cut costs in order to stay profitable, in order to stay in business? >> absolutely, but then the question becomes, at what point do you basically go beyond normal cost-cutting and you're in to reckless behavior? >> but bp's senior executive in charge of refineries, john manzoni, denies that. he told lawyers in this deposition that budget cuts never compromised the safety of bp's employees. >> i don't believe it's the case ever that we short-changed budgets on safety issues. >> if in this trial someone says that bp puts profits over the safety of its people, what would be your response to that? >> my response would be that is not how we run the company.

[watch ticking] >> the government finds that cost cutting did jeopardize the texas city refinery. >> is there a direct relationship between the budget cut and the disaster at texas city? >> we believe there is. >> when 60 minutes on cnbc returns. [watch ticking] with the spark cash card from capital one, sven gets great rewards for his small business! how does this thing work? oh, i like it! [ garth ] sven's small business earns 2% cash back on every purchase, every day! woo-hoo!!! so that's ten security gators, right? put them on my spark card! why settle for less? testing hot tar... great businesses deserve great rewards! [ male announcer ] the spark business card from capital one.

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that's up to 76 percent below online providers and only at officemax stores! [watch ticking] >> when bp acquired the texas city refinery from amoco, the plant was already in a state of disrepair. instead of spendin to update the pl cutives in londo their refinery managers to cut their budgets. >> 25% of their fixed costs were cut. and when you cut that much out of a budget in a facility, you lose people. you lose equipment. you lose maintenance. you lose trainers. our investigation has shown that this was a drastic mistake. >> so as the texas refinery got older and needed more maintenance, more attention to safety, bp cut the budget in those areas? >> yes. >> is there a direct relationship between the budget

cut and the disaster at texas city? >> we believe there is. >> one of the best examples, she says, is on the very unit that caused the explosion. in the ten years leading up to the disaster, there had been eight major gasoline vapor releases on that unit, any one of which could have been catastrophic. most refineries install safety devices, called flares, to burn off excess gasoline to avoid disasters. bp chose not to. >> doing good. what's up? >> brent coon is a texas lawyer representing several victims suing bp. he will argue in court that by failing to upgrade antiquated equipment with flares, the company knowingly put lives at risk. >> they knew that if they didn't fix these thing, they were increasing the risk, unnecessarily increasing the risk, of something major happening. >> so why were they still using them at texas city? >> because it cost several million dollars to get rid of them. >> but i mean, this was a plant that made how much in profit? >> they made about $1 billion a year at that plant.

>> so there's money there to replace them. >> sure. well, ed, the deal is, you want to make $1 billion dollars, or do you want to make $998 million? they chose to make $1 billion. >> there is evidence that texas city's own plant manager, don parus, was dismayed by unsafe conditions at the refinery and even tried to get the attention of his bosses in london. he briefed them on a report revealing that most workers at the refinery felt the plant was unsafe. one worker wrote... another wrote... >> what do you do you when you realize that everybody at the plant says this place is about to blow up? >> and what did they do? >> they didn't do much. two months later, the plant blew up. >> bp's top refinery executive john manzoni said under oath that he didn't know of serious safety concerns at the refinery until the day of the explosion. >> the 23rd of march, 2005.

>> before that, you had no idea there was a risk of catastrophic injury? >> no. i think had i been aware that we could have had a catastrophic failure, we would have taken action earlier. >> are you telling me that there were not members of management who were quite aware there was a great risk of harm to people at texas city before this explosion occurred? >> i believe that there were-- i believe nobody knew the level of risk at texas city, because if they had known, i have absolutely no doubt we would have taken different and substantively different actions. >> and yet 1 1/2 years before the explosion, the company's own safety expert sent a report to london that actually predicted what would happen. it warned that the history of petroleum leaks at texas city created... before the explosion, bp london did increase spending

at texas city. but plant manager don parus has now acknowledge in a deposition that it was too little too late. the company sent us a letter which said... the company has set aside $1.6 billion to settle lawsuits with victims and survivors. if every plaintiff settles and the case never goes to trial, many of those damaging internal bp documents will remain under court seal. eva rowe, who lost both of her parents, says she won't go along with that. >> to bp my parents were just another number. to them, they're replaceable. to me they weren't just a number. they were somebody. >> a lot of people who suffered terrible losses that day have already settled with bp. has bp offered to settle with you? >> y